India's flagship production-linked incentive scheme for advanced chemistry cell (ACC) battery manufacturing is undergoing significant reconsideration as the program faces substantial implementation delays. The Union heavy industries ministry is actively evaluating extensions and more flexible localization requirements for companies participating in the ₹18,100-crore initiative.
Scheme Targets vs Ground Reality
The ambitious PLI-ACC scheme, announced in 2021, had set an ambitious target of establishing 50 gigawatt-hour (GWh) of manufacturing capacity by December 2024. However, recent data reveals a stark contrast between planned objectives and actual progress. As of June this year, only approximately 1.4 GWh of capacity from Ola Electric has become operational, representing less than 3% of the overall target.
This significant shortfall has prompted government intervention, with the heavy industries ministry recently issuing show-cause notices to companies approved under the scheme. According to sources familiar with the discussions, beneficiary firms have requested an extension of approximately 18 months to meet their commitments, and these requests are currently under serious consideration.
Proposed Relaxations and Industry Challenges
The government is contemplating multiple measures to revitalize the struggling scheme. One key proposal involves allowing imports of battery cells at reduced customs duties until domestic manufacturing capabilities mature. This temporary relief would help companies bridge the gap while they develop their own production facilities.
Industry experts identify several deeper challenges beyond simple project delays. China's strict control over graphite exports has significantly impacted battery manufacturing progress in India. Additionally, high basic customs duties across the supply chain, while intended to boost domestic manufacturing, have increased costs and reduced the competitiveness of Indian products.
Vikram Handa, managing director of Epsilon Advanced Materials, emphasized the critical need for upstream alignment. "Without secure access to core materials, cell manufacturing simply cannot take off," he stated. "If India wants to see gigafactories running at scale, we must connect the dots between upstream readiness and downstream investment."
Current Capacity Allocation and Import Dependence
The original 2022 allocation under the PLI-ACC scheme distributed 30GWh of capacity among three major players. Ola Electric received 20GWh, while Reliance New Energy and Rajesh Exports were allotted 5GWh each. In a subsequent allocation in September 2024, Reliance secured an additional 10GWh capacity.
Despite these allocations, India's dependence on imported batteries continues to grow. Data indicates that India imported over 12GWh of lithium-ion batteries in the past twelve months, with projections suggesting this could increase three to fivefold in the coming year. This surge is driven by rising demand in both electric vehicles and stationary battery storage applications.
Heavy Industries Minister H.D. Kumaraswamy had acknowledged in June that while challenges exist, India's ACC capacity was gradually increasing. He noted that more than ten companies beyond PLI beneficiaries have begun establishing cell manufacturing units targeting over 100 GWh of combined capacity.
The PLI-ACC scheme now joins other PLI initiatives that have struggled to gain expected momentum. The government has already extended timelines for the ₹19,500-crore PLI scheme for solar modules by one year, indicating a pattern of adjustment to ground realities across the manufacturing incentive landscape.
